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Amazon wants to sell an office complex known as the Metro Corporate Center in Milpitas, California, that it purchased only 16 months ago, as the company further consolidates its real estate holdings.
Amazon paid $123M for the 29-acre property in October 2021, as part of its strategy at the time to secure real estate near major metros in anticipation of future growth, according to Bloomberg. The sales price was not disclosed, but Bloomberg reported that Amazon is expected to take a loss on the sale.
Dermody Properties will purchase the property, converting the office park into warehouse space, Bloomberg reported. George Condon, a partner with Dermody, told Bloomberg the deal is expected to close by the end of April, while Dermody looks for warehouse tenants.
Amazon started shutting down logistics centers at the end of last year, primarily targeting smaller spaces in secondary cities. The company also ended the year with a significant number of layoffs.
Industrial in the Bay Area was one of the stronger asset classes throughout 2022, with tight supply and low availability leading to consistent demand. A Cushman & Wakefield Market Beat report for Q4 2022 reported vacancy rates of 5.7% and 3%, respectively, across San Francisco's North Bay and the San Francisco Peninsula for the year's end.
Notably, however, both markets saw no new supply come online in 2022, according to the report, with only 40K SF under construction in the North Bay as of Q4 2022.
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